Benchmark index falls 26 points as investors try to cash in
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Understanding Stock Market
KATHMANDU, AUGUST 1: Nepal Stock Exchange (Nepse) benchmark index slipped 25.97 points this week to close at 1,027.98 points on Thursday -- the last trading day of the week. The stock market went down this week following a gain of 75.24 points in the last five weeks.
According to stock brokers, the market has taken a corrective route due to the 'profit booking' by investors.
"The market had gone up significantly in the past few weeks. Many investors divested their shares to cash in on the price gains made during the bullish trend of the market," Narendra Sijapati, a former president of Stock Broker Association of Nepal (SBAN), told Republica.
A stock market rally was given a boost early last week after Nepal Rastra Bank (NRB) introduced a new provision through its recently unveiled Monetary Policy 2015/16 requiring bank and financial institutions (BFIs) to increase their paid-up capital by four times. This helped the Nepse benchmark index touch the four-digit-mark for the first time in the last one year.
"Though the market went into correction mode the last few days, we can expect further rise in the index and the share prices of most of companies. The positive political development that has raised the hopes of a new constitution within a month or two, the dividend announcement season that is round the corner and the expectation that BFIs will have to distribute stock instead of cash dividend will further lift the market," Sijapati, who is the managing director of stock brokerage firm Kalika Securities, said.
A majority of the trading groups in the stock market ended lower this week. Among them, the Hydropower group was the biggest loser with its sub-index diving 168.98 points to end at 2,144.68 points. The Insurance group's sub-index shed 162.64 points to finish at 4,254.87 points. The Hotels and the Development Banks groups also plunged 103.7 points and 43.64 points respectively to settle at 1,848.49 points and 849.9 points. The sub-index of the Banking group, the heavyweights, also fell 16.3 points to end at 937.39 points. The Others group also went down 2.35 points to close at 737.8 points.
The Trading and the Finance groups, however, logged gains of 3.46 points and 3.77 points respectively ending at 206.34 points and 542.15 points. The Manufacturing and processing group also edged up 0.38 point to close at 1,685.83 points.
A total of 7.19 million units of shares of 174 companies worth Rs 3.33 billion were traded in the stock market this week through 15,416 transactions
